Blue heron standing in coastal marsh | Georgia | Vivian Hoard | Tax AttorneyBased on the advice of Nick Murray in his fifth edition of “Simple Wealth, Inevitable Wealth”, investment decisions should be based on more than taxes. This may be especially true when thinking about conservation easements.

If done correctly, a conservation easement is a very good and legal way of protecting land, water, air, and nature. Often times, these easements are the reason we have beautiful open spaces that we enjoy. Despite this, particular types of conservation easements are subject to accusation for being ‘inappropriate tax shelters’. Consequently, conservation easements can be tricky, even with all their environmental benefits.

The restriction on the property that a conservation easement provides lasts forever. In most cases that restriction prevents the owner from developing the entire parcel, or some part of it. As a reward for conserving the land, the owner receives a charitable tax deduction. This is, however, only awarded in the case that the restriction is for a charitable purpose, such as protecting a natural habitat, providing a public open space, or a public recreation space.

There are many administrative requirements for compliance with 26 U.S.C. §170. However, the two most common reasons invalidating an easement are the absence of conservation purpose and exaggeration of value. For this reason, it is incredibly important that the taxpayer is very careful in his/her selection of both environmentalist and appraiser for the easement. Read more…

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